Indianapolis Biz Journal on 49th and College development

Dateline: Wed 11 May 2011

Here is the latest from IBJ about the beleagured properties at 49th and College that Leif Hinterberger had hoped to develop into the Uptown, a proposed low-cost rental project that would bring seniors, students, etc., into the mix. How ironic that Bryan Chandler, a successful developer who launched Patachou etc. at 49th and Penn, is now the mortgage-holder.

May he do the right thing. He has a track record of success; time will tell. The area is ripe for Midtown development, and the area is now an eyesore.

"By CorySchouten

"Indianapolis Busiiness Journal

"May 11, 2011

A Marion County judge has appointed a receiver to take control of three properties involved in a long-delayed redevelopment proposal for College Avenue between 49th and 50th streets.

A Marion County judge has appointed a receiver to take control of three properties involved in a long-delayed redevelopment proposal for College Avenue between 49th and 50th streets in Indianapolis.

The $19 million mixed-use proposal, already hobbled by an unsuccessful quest for government grants and a weak lending environment, faces an even more uncertain future after the ruling by Marion Superior Court Judge Patrick L. McCarty.

The judge appointed Jeffrey A. Adams of locally based Cohen Garelick & Glazier as receiver, setting aside pleas for more time from developer Leif Hinterberger, who has spent six years and most of his life savings trying to turn the blighted block into apartments and retail space.

Hinterberger already lost control of three duplexes on the northern half of the block needed for the project, dubbed The Uptown. The run-down retail buildings now under receivership represent the southern half.

The mortgage holder on those buildings, an entity controlled by real estate investor Bryan Chandler, initially filed to foreclose on the $500,000 note in December 2010, after it matured the previous February. Chandler's company, Strategic Mortgage Funding, bought the note from Indiana Business Bank in November 2010.

Hinterberger, who owns locally based Carreau Design Corp., said Chandler approached him after buying the note at a discount and offered to help try to get the project off the ground.

Hinterberger called the appointment of a receiver "irrelevant" and said he's still working with city officials, neighbors and lenders on a plan to "clean up the block comprehensively."

"The lender is trying to take over and steal the ground," Hinterberger said. "We've given every opportunity for them to step to the plate and do the right thing."

Chandler declined to discuss the properties.

Court records suggest Strategic Mortgage Funding wasn't in a big rush to wrest control of the properties from Hinterberger. The company did not ask for a receiver until March, more than a year after the note matured without payment.

The outstanding balance on the mortgage is about $561,000, which includes principal, interest, unpaid property taxes and legal bills, court records show. The properties listed as collateral are 4902 and 4918 N. College Ave., and 654 E. 49th St. The buildings have a combined assessed value of about $170,000.

The buildings on College Avenue are vacant and considered beyond repair. But Hinterberger has moved two tenants into the 49th Street building: Lamp Gallery and a retro boutique called Reclamation. He said neither is paying rent after agreeing instead to invest in fixing up their space.

The arrangement apparently did not impress the mortgage holder.

Even if Hinterberger pays back the note and regains control of the buildings, he likely would have to scale back his vision for The Uptown. He reached agreement with a lender last year to allow short sales of three duplexes he had bought and planned to raze for the project.

The plans for The Uptown most recently called for 46 apartment units over first-floor retail, with parking behind the building. The total project would have been about 65,000 square feet, down from an earlier proposal for 180,000 square feet.

Hinterberger on Wednesday would not say whether he still envisions a project of similar dimensions.

"We're really getting close to being able to create a win-win," he said Wednesday, echoing a pitch he made to frustrated neighbors back in 2010. "Our whole neighborhood and city will lose if we can't get rid of what's at 49th and College."

Hinterberger last year said his company had spent a total of $3.8 million to acquire properties and develop plans for The Uptown, on top of the $1.2 million it paid to renovate the historic building at the southwest corner of 49th Street and College Avenue into the Uptown Business Center."

Comments

Tell The Truth [Member] said:

Remember, I told you at the time--the rezoning was lousy, and the redevelopment was lousy. It bitterly divided a neighborhood. Needlessly. The developer tried to "fix" a minor rehab problem with a major re-do. He went duck hunting with a cannon.

The corner was perking along just nicely as it was. One of the few small neighborhood centers that worked. It needing sprucing up perhaps--but not the redevelopment with extra outdoor seating as proposed. Rents skyrocketed, too, to pad the pockets of the "new" developer/lender. A very slick inside mortgage transaction, huh?

This began and really ended, with a zoning variance request. Variances, properly administered, can be ideal gatekeepers for successful development. Remember, under STATE LAW, if you want a variance, you have to prove a fiscal hardship would exist in the absence of the variance. That standard was laughingly not met. Again.

The developer wanted a parking variance. And expanded outdoor seating, which, in effect, creates the need for much more parking. It was tight parking before. The street-scape may be pretty, but the demands put onto the area, by the increased parking needs, are severe. No contrary arguments can be reasonably made.

Enter the developer, who sweet-talked nearly everyone into a stern parking variance. Think about it this way: if you add 1,500 s.f. onto your 1800 s.f. home, you likely need to increase the HVAC somehow. The old system likely can't handle the increase. Parking is even more demanding--cars roll out onto side streets and wherever they can to park in an expanded neighborhood center.

I love Pattachou, but the variance should never have been granted. It was cramming too much into a small space. The statutory requirement was flatly not met--the PR machine did the job. Tell me--how was Pattachou "failing" before this variance was granted? The whole concept was a house of cards, and I'm betting it wasn't of Martha's making. She, too, was likely goaded into this by the developer.

The proper protection was in place. The city--goaded on by a slick campaign of persuasion--"gave in" because we've all got a love affair with Martha and her fantastic restaurants. But this was not about the restaurant--never was. It should've been about the demands placed on a small property.

It was checkbook zoning at its worst. Now, nobody wins. Let's hope the developer does the right thing--but I wouldn't hold my breath.

If nothing else, let this be a shining example that variances can have stern consequences.

Reminds me of a good 70s song about paradise and parking lots.

Mostly, I hope the corner recovers and prospers again. Martha richly deserves that. The developer? Not so much. And beware--he WILL try this again somewhere. And he's not alone. Our zoning process is almost completely broken.

Sorry for the ramble. This tired subject keeps repeating its lessons and we never seem to learn.

2011-05-12 05:18:49

Um [unverified] said:

The development discussed in the IBJ story is on College, not Penn. Patachou, the Barking Dog and all the other business at 49th and Penn seem to be perking right along.

2011-05-12 13:40:23

hendy [Member] said:

At 49th and College are a bunch of older businesses, once a Linder's Ice Cream store that I loved to visit. A KFC... Steck Plumbing. Grandiose dreams at the edge of SoBro.

You can tell how Indianapolis was built by the lot sizes in the neighborhoods. White flight to the suburbs caused radical changeovers in the neighborhoods. Investment money left. The deal described came at a bad time. That it's in receivership is no real surprise. It's tough out there, folks. Were this 116th and SpringMill.... oh, I guess they're having problems and fights, too.

2011-05-12 17:42:27

Write Man [Member] said:

I'm vaguely on the periphery of Bryan Chandler's circle, have met him once; my sense is that he'll do something that looks and feels very similar to the corner of 49th/Penn in terms of buildout, fit and finish, and is equally successful from a commercial perspective.

Midtown (if that's what we're calling this part of town) is humming right along in general, and I'm happy to take some good news.

2011-05-13 04:34:36

Duke Young [unverified] said:

There is a formatting problem with this article (at least when I opened it with my firefox browser). About ten spaces are covered up on the right side by your links window. I have noticed this before on a few articles. Thanks for pointing to this piece. It was free on the IBJ and I read it there. Duke

2011-05-13 07:00:20

Tell The Truth [Member] said:

Wong corner.

Sorry.

Same developer though. Do not believe what you hear yet. Double-check anything he says. Seriously.

2011-05-13 20:24:21

Um [unverified] said:

It would just be horrible if a new developer managed to corral the resources necessary to reinvigorate 49th and College. Gosh, all that commerce in an approved commercial node that dates back to Interurban days would just suck. People on their way from downtown to Carmel might just have to slow down. Some may even stop to frequent unique shops owned and operated by people who live nearby. It ain't paradise and there won't be any of those huge suburban parking lots, but it may be as nice as its cousin a few blocks to the west.

2011-05-14 06:40:44

hendy [Member] said:

Gosh. Then they could go to 46th, 52nd, 54th, along 54th, over to Keystone, that gaudy, telephone pole signage problem from hell.

Neighborhood developments are nice-- for neighborhoods. Trying to make them into meccas for other shoppers defies credulity.

The Interurban was killed by General Motors. The Monon trail is a "green space". We need all of these, but it's a fact that economics don't support a huge development at 49th and College just because someone wants them to. In market economics, there has to be value, traffic, and capital. The intersection lacks all three of these, not to mention something attractive like art, beauty, or even a lack of aforementioned telephone poles. It's a blighted area, and could be served better, but economics and reality don't support dropping millions into it.